In Shift, Chevron Drops Key Legal Claim and Now Concedes Pollution Does Exist In Ecuador

NEW YORK, Feb. 19 /CSRwire/ - In a significant tactical retreat that likely will hurt its efforts to resist international enforcement actions, Chevron has told a New York judge that it is withdrawing its claim that the $19 billion Ecuador judgment was the result of “sham” and “objectively baseless” litigation and is in effect conceding that there is evidence that the company caused pollution in the country.

The formal withdrawal of Chevron’s “objectively baseless” litigation claim – made in a recent procedural filing (also see here) to New York federal judge Lewis A. Kaplan – represents a key retreat in that it was the linchpin of the company’s defense to enforcement actions brought by the Ecuadorians targeting billions of dollars of assets in Canada, Brazil, and Argentina.

“This move severely weakens Chevron’s ability in enforcement actions to attack the Ecuador judgment, which is premised on extensive evidence the oil company committed massive contamination in Ecuador,” said Pablo Fajardo, the lead lawyer of the dozens of indigenous and farmer communities that brought suit against Chevron.

The “sham litigation” argument also was the centerpiece of Chevron’s so-called fraud and racketeering case in New York, which is slated for trial in October. The latest procedural retreat is certain to weaken Chevron’s claims in that case as well, said Craig Smyser, who represents the Ecuadorians in that action.

Chevron withdrew the “sham” and “objectively baseless” litigation claim at the suggestion of Judge Kaplan as a way to avoid having to release internal documents during discovery in New York that might prove it engaged in an elaborate ruse to cover up evidence of its own pollution. Judge Kaplan repeatedly has been accused of bias against the Ecuadorians and of trying to engineer a verdict in Chevron’s favor. See here and here.

“Chevron’s withdrawal of this claim underscores the lengths the company will go to suppress the truth about its environmental crimes even though that truth obviously exists in its own internal files,” said Humberto Piaguaje, who coordinates the litigation for the 80 indigenous and farmer communities who lives in an area contaminated by Chevron’s operations.

“The change reflects an adjustment to Chevron’s trial strategy to avoid having the jury hear and see evidence of its contamination of the rain forest and use of substandard drilling practices,” said Smyser, who represents the Ecuadorians in the New York action.

Before its latest retreat, Chevron had maintained that the underlying lawsuit had no valid scientific basis to support the claims of pollution to the land, water, and lives of those in the Amazon rain forest living where Chevron drilled under the Texaco brand for more than 30 years. Chevron made this claim despite the fact its lead executive in Ecuador, Rodrigo Perez Pallares, admitted that company had dumped more than 16 billion gallons of benzene-laden toxic formation water into the Amazon when it operated in the country from 1964 to 1992.

Chevron sought the change after the Ecuadorians filed discovery requests that Chevron produce documents about the more than 300 wells and 900 open toxic waste pits it abandoned in 1992. Chevron objected to producing any documents about its drilling practices and withdrew any allegation that the rain forest was not polluted to avoid the jury receiving evidence of those facts, said Smyser.

The Ecuadorians and their counsel also requested that Chevron produce all records of the operations of its well sites in Ecuador, the company’s internal audits and inspection reports about the pollution, and any information the company had hidden from its own experts who testified on behalf of the company during the trial.

When Chevron filed the New York racketeering case in 2011, it alleged more than 20 times in its lawsuit that the Ecuadorians “initiated a sham litigation… to remediate alleged petroleum contamination in Ecuador’s Oriente region” or that the case was “objectively baseless, improperly motivated sham litigation.”

The “sham” and “objectively baseless” litigation claim also has been used by Chevron’s six public relations firms to try to taint the Ecuador judgment, which the plaintiffs always have maintained was based overwhelming on scientific evidence as affirmed unanimously on appeal in Ecuador. A summary of that evidence can be found here.

Now that Chevron has simply dropped much of its claim to avoid its discovery obligations, Judge Kaplan has asserted that the only issues left in the U.S. trial concern whether the Ecuador proceeding was conducted in a fair manner in accordance with Ecuador law – an absurdity if there ever was one, said Fajardo.

“This is another example of U.S. judicial arrogance coming from Kaplan’s courtroom,” said Fajardo, noting that Kaplan already was reversed unanimously by the Second Circuit Court of Appeals for trying to impose a global injunction barring the Ecuadorians from enforcing their judgment in any country in the world.

“The notion that a U.S. trial judge is going to determine whether Ecuador conducted a trial that was fair according to its own rules when Ecuadorian courts already have ruled on the issue has no basis in the law, and likely will backfire against Chevron in international courts,” he added.

In reference to Chevron’s latest maneuver to evade its discovery obligations, Fajardo said: “When it was time for Chevron to put up or shut up about its own claims, it shut up and covered up.”